The effects of exchange rate volatility on agricultural trade.

摘要

A previous analysis of the effect of exchange rate volatility on agricultural trade among the G-10 countries was extended to include a broad sample of developed and developing nations. The original finding that exchange rate volatility has a large negative impact on agricultural trade between G-10 members was confirmed. Controlling for agricultural export subsidies, which are correlated with exchange rate volatility, was shown to reduce the original impact by half. The effect of exchange rate volatility was found to be greatest for developing country exporters and least for exporters in developed countries. In addition, only the volatility of the vehicle currency (USD) exchange rate was found to matter for developing country exporters; the volatility of the exporter-importer currency exchange rate was of little importance. After controlling for non-linear effects, the elasticity of developing country agricultural exports with respect to the vehicle currency (USD) exchange rate volatility was determined to be -0.507. Taking export subsidies into account, that elasticity for G-10 agricultural exporters is just -0.056.